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Relevant Stablecoin Initiatives To Soon Be Part Of The UK Treasury

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A few years ago, digital assets were subjected to tremendous government hate and hostility. The non-volatile nature of stablecoins, however, seemed to have attracted regulators. Since digitization began in full swing, governments have been exploring the development of the digital currency of the central bank, most commonly known as the CBDC. Though China has been the fastest in the development of the CBDC, other countries have been caught up in the race. The UK seems to be the latest one to take a big step in that direction.

UK To Probe Stablecoins And CBDC

The United Kingdom’s Treasury Department seems to be serious about digitalization as it yearns to put into place regulations for the same. A recent article from the UK Treasury revealed that country was steering towards revamping the existing financial sector of the country. The Chancellor of the UK Treasury, Rishi Sunak explained that the Treasury would put forth necessary initiatives pertaining to stablecoins in order to make sure it is at par with the already established payment methods.

UK’s departure from the EU created quite a buzz and the Treasury views it as an opportunity to formulate a new chapter in the history of financial services in the country. Sunak added,

“By taking as many equivalence decisions as we can in the absence of clarity from the EU, we’re doing what’s right for the UK and providing firms with certainty and stability. Our plans will ensure the UK moves forward as an open, attractive and well-regulated market, and continues to lead the world in pioneering new technologies and shifting finance towards a net zero future.”

Sunak, also took to Twitter to reveal that the country would soon publish a consultation in aid of new and privately-issued currencies. While the UK’s latest move reveals that the country has been welcoming newly issued stablecoins, the European Union had revealed contrasting thoughts about the same. The EU in a recent meeting revealed that no other private organization apart from the ECB was to issue stablecoins.

Furthermore, with regard to CBDC, the Chancellor revealed that the Bank of England and the Treasury were contemplating allowing central banks to issue their native digital assets as a counterpart to cash.

UK High Court Forces Cryptocurrency Platform Shutdown as Fraud Charges Emerge

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Despite increased acceptance for the cryptocurrency industry, there are still some governments and mainstream institutions that have kept a close eye on the ecosystem. The spotlight was recently on the United Kingdom when the government shut down an online cryptocurrency trading platform for fraudulent activity.

On 30 June, the High Court in the United Kingdom proceeded to dissolve GPay Ltd for misleading investors and flouting capital controls. The company was formerly called Cryptopoint and had investors from the United Kingdom and several countries outside the jurisdiction of the ERU jurisdiction.

The initial complaints arose when customers were repeatedly asked to use GPay’s online trading platform through ads and banner placements. The biggest issue was that the company falsely claimed to be associated with big-shot entrepreneurs in the field. According to a release from the government:

“The company, which traded as XtraderFX and formerly as Cryptopoint, targeted people in the UK and abroad, advertising its services online and via social media channels. Following complaints, however, the Insolvency Service conducted confidential inquiries into GPay’s activities before investigators uncovered that at least 108 clients claimed they had lost in total just under £1.5 million while using the company’s online trading platform.”

Platform analysis showed that clients were faced with issues with their withdrawals if they did not participate in trading on a routine basis. David Hill, Chief Insolvency Investigator, had a few comments on the entire situation. Hill claimed that GPay had persuaded customers to part with substantial sums of money to invest in cryptocurrency trading platform.

The decision of the court was accepted by legitimate sources as this would prevent other investors from being affected by false pretenses. Initial investigation reports said that almost 108 clients had suffered losses of almost $1.5 million due to the organization. In some cases, clients have lost their capital despite having insurance cover.

GPay ‘s controversial turn of events has made other investors and companies sit down and take note of liabilities related to unchecked ecosystems. The UK Government has urged both new and existing customers to make thorough run-throughs whenever it involves hard-earned capital.

UK-Based Crypto Firms Receive Closure Threats from FCA

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The UK-based crypto firm received a reminder from the Financial Conduct Authority on 22 June regarding the submission of completed registration forms before the end of the month. The Authority intends to create adequate time for the processing of applications before the registration deadline of January 2021.

The FCA is responsible for overseeing the efforts of the United Kingdom to combat financial crimes such as money laundering and terrorist financing. Besides that, earlier this year, on 10 January, the Authority assumed jurisdiction over more power over virtual assets.

“Any businesses that started carrying on business in the UK immediately before January 10 2020 and are not registered by the FCA by the January 10 2021 deadline will have to cease carrying on business. Any new businesses which began operating after January 10 2020 must be registered with the FCA before carrying out any business,” wrote the FCA.

FATF and AMLD5 implementation in Europe

The Fifth Anti-Money Laundering Directive came into force in the United Kingdom on 10 January. The Directive, which will be implemented in all European union member countries, is intended to restrict crypto-related companies. The AMLD5 extended the realm of knowledge-your-customer (KYC) that crypto-exchanges should undertake.

UK-based crypto businesses should also register with the Financial Conduct Authority and should also be verified by the authority. Digital currencies are popular with criminals for a valid reason; their privacy features. According to a report by the research firm Cypher Trace, 0.69 percent of all cryptocurrency transactions in UK-based crypto firms originally came from criminals.

UK-based crypto firms to comply with new regulations

The FCA is tightening loops to commit such financial crimes in the United Kingdom. The authority highlighted that it is motivated to oversee UK-based crypto firms that are compliant with the new AMLD5 directive and FATF regulations; the body will take the necessary response if the firms fail to comply with all the new rules.

Furthermore, UK-based crypto firms should also comply with the new regulation in the industry. The Financial Action Task Force (FATF) proposed that crypto firms abide by the “travel rule.” FATF is an international multi-governmental authority; tasked with combating organized crime, corruption, and terrorism. 

Avanti Bank and Trust CEO Claims the Dollar May Be Heading Towards a Fall Just Like the Pound

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Over the last few years, the world economy has gone through some tumultuous times when multiple countries have registered massive losses in their stocks. The United States and Europe were the focal points of the financial world since most market trends have originated from the aforementioned regions.

Although the US and countries in Europe were seen as stalwarts in space, a pattern has emerged where both the dollar and the pound have fallen below the expected standards. Caitlin Long, Chief Executive Officer [CEO] of Avanti, recently spoke about how the dollar’s dominance was waning much like that of the pound in the 20th century.

Analysts claimed that the dollar was seeing a dip because of a pattern of over-consumption. This was due primarily to expansion into other countries where the dollar was set as the standard for any trade or exchange. It has been the reason why countries need to be cautious about the fall of the dollar as it can also impact their native economies. Speaking on the prevalent issue, Caitlin Long was quick to point out that the US would soon pay reparations if corrections were not made quickly.

Long’s tweet on the dollar discussion read:

On Thursday, the dollar suffered a loss when the NSE fell by 3.88 percent. This was on the back of the US Federal Reserve’s decision to open the door to monetary easing, with a majority losing hope that the economy would recover anytime soon. The silver lining in the situation was that the positive COVID-19 drug tests boosted the hunger for riskier assets.

A cursory analysis of the economy has shown it may take several months before the US market recovers. As the Federal Reserve pumped more money into the market, the dollar was seen to be progressively weaker. Researchers added that the dollar/yen pair could drift lower soon, with the euro benefiting from the fall.

On Thursday, the dollar traded for 106.72 yen in Asia, while the currency was $1.2455 against the dollar. The US Federal Reserve was also in the news recently after a two-day policy meeting on Wednesday. According to reports, the Fed has decided to keep interest rates close to zero while planning to expand the emergency program across the country. Economists predict that the second quarter of 2020 would be even worse as some countries plan to extend ongoing lockdowns.

Asian countries have maintained a steady pace in comparison to American markets. China has been one of the main leaders asserting its hold on the financial sphere as more and more developments continue to take place within the country. Several provinces in the Red Dragon have begun to ease the lockdown of their economy, and the Renminbi is expected to bounce soon.

 

Revolut Becomes UK’s Most Valuable Fintech Startup, Officials Still Wary of CEO’s Kremlin Connections

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The cryptocurrency industry has gone through multiple phases since the massive bull run of 2017. Since then, the industry has been hit with speculations, price drops then a renewed interest shown by institutional investors.

Out of all the cryptocurrency companies out there, Revolut, based in the UK, has come out on top. The digital bank recently revealed that they had become the country’s most valuable financial technology startup.

Revolut received a massive boost in valuation after its latest funding round which elevated its value to 4.2 million pounds. The latest number is almost triple than that of its earlier valuation, prompting many to believe that the cryptocurrency industry was only thriving.

The latest funding round has allowed Revolut to usurp its rivals Monzo and OakNorth, both holding valuations of EUR 2 billion and EUR 2.2 billion respectively. The two rival companies were also trying to enter multiple markets across the world but regulatory frameworks have been an issue. Monzo and OakNorth can, however, take solace in the fact Revolut has also not turned a profit till now. If anything, Revolut’s losses had more than doubled in 2018 to settle at $33 million.

Revolut’s latest valuation boost was provided by the US Technology Crossover Ventures Fund, which pumped $500 million into the company. Investors have a tendency to invest in a growing business, as they also own shares in Spotify, Netflix, and Airbnb. The digital bank was also in the news recently when it launched a feature to allow users to aggregate other bank account data within its application.

The feature would allow customers within the United Kingdom to connect their individual UK bank accounts to Revolut. This was created to create a more wholesome banking environment where customers can see all their spending in one place. The update seems to have worked for the startup as the company is now worth three times more than its valuation in the spring of 2018.

Nik Storonsky, the Chief Executive Officer [CEO] of Revolut gave his two cents on the latest partnership:

“Going forward, our focus is on rolling out banking operations in Europe, increasing the number of people who use Revolut as their daily account, and striving towards profitability. TCV has a long history of backing founders who are changing their industries on a global scale, so we are excited to partner with them as we prepare for the next stage of our journey.”

Despite recent news, Revolut found it difficult to maintain a positive face in the industry. This comes as a result of multiple reports from overworked staff and the CEO’s connection to Russia. Although the official has denied any links with the Kremlin, lawmakers still remained wary. The first tip-off came in 2014 when investigators discovered that Storonsky’s father was a director at the much-maligned Gazprom.

DAG Global Plans to Make History by Pushing for United Kingdom Banking License

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As the cryptocurrency market moves forwards, so does the worldwide financial sentiment. From first being a niche product, the digital asset industry has jumped leaps and bounds with help from mainstream institutions also. 

Now the United Kingdom-based startup was applying to become the region’s first official bank for cryptocurrency and blockchain-based businesses. 

DAG Global took the initiative to make sure cryptocurrency businesses could integrate with mainstream bodies so that they flourish. The London based startup was first set up in 2018 and will resubmit an earlier application to start providing accounts to crypto companies in 2021.

Officials close to the operation have aid that the bank had several constructive discussions with the Prudential Regulation Authority, the Financial Conduct Authority as well as with UK regulators. Sean Kiernan, the chief executive of DAG Global said:

“It’s a lack of understanding and reputation risk that has kept others away — we think it can be a cleaner sector [than mainstream finance]. Thus far, the regulators have not raised any red flags.”

The company had first aimed to launch its services in 2019 but that came to a standstill because of scrutiny about the bank’s business models. The FCA, as well as the PRA, have both not commented on the companies but they have been known to set regulatory standards.

The UK has always been a tough nut to crack for cryptocurrency companies. Even global corporations such as Coinbase find it difficult to obtain licenses in London. The world’s largest cryptocurrency company had a tie-up with Barclays which expired last year. The FCA’s guidelines, however, stated that decisions need to be made with an open mind adhering to anti-money laundering rules.

Stephanie Ramezan, the chief commercial officer at DAG revealed that the bank has been approached on a daily basis. She feels people were fed up of facing multiple obstacles to conducting simple transactions. According to Ramezan, users have the right to use streamlined services that do not hinder their banking experience.

Possible Implications of Brexit On Bitcoin And The Entire Cryptocurrency Industry

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After years of planning and plotting, The Great Britain has finally left European Union. This Brexit topic has not only divided Britain and Europe, but also a lot of others worldwide, who are now worried about what effects Brexit will have on Bitcoin and the rest of the cryptocurrency industry.  

This event is expected to bring about a big shift in the global economy on top of several unforeseen reverberations. It also begs the question, will this geopolitical cause have any impacts on bitcoin and crypto?

The obvious prediction is that European, British and the world markets will make a shift; up or down depending on the side, you are on. However, in the background, a discrete and decentralized financial market is beginning to blossom in mutuality to what happens in the traditional financial sector.

The position of Bitcoin during the post-Brexit period is a topic of great significance in Europe. More so, the break-off of the UK; a major Fintech hub; will have a huge effect on the free flow of cash, investing and general transactions. Some good news to the cryptocurrency industry is that; all of a sudden, Bitcoin looks like a great alternative to all those who would be negatively impacted by this move. 

Will Brexit affect Digital Currencies Prices?

Well, over the last few months during times of international uncertainties such as the falling economy of Argentina, US-China trade wars, the recent tension between the U.S. and Iran; the cryptocurrency industry seemed to be doing even better.  In other words, the industry seems to benefit from Chaos. Some analysts believe that Bitcoin may reach a new high during the Brexit period.

During an interview with the Independent back in 2019, Luno Cryptocurrency exchange CEO Marcus Swanepoel noted that crisis contributes to the price of Bitcoin. As per him, the Argentinian crisis and the trade-war during the time contributed to Bitcoin breaking the market trend by breaching the $10,000 resistance level.

“After lacklustre trading over the weekend, bitcoin went against the market trend yesterday, quickly breaking through the $10,000 level and reaching $10,500,” Swanepoel said.

“Today the focus will be on Europe and the Brexit developments in the UK, as well as the deepening crisis in Argentina. After the Labor Day holiday in the US, all markets are open, and we can expect to see volumes rising in what is normally the busiest trading month of the year.”

 

Moreover, with the Brexit being viewed as an impermanent financial hand-brake, British investors could easily start focusing their regard to the virtual currency space instead of European investments. Well, Brexit will make European investments difficult to attain, less attractive and even harder to operate.

On the same token, the price boost may be minimal because British investors only make up an insignificant portion of the global numbers related to Bitcoin investments.  According to William Thomas, CEO of exchange Cryptomate:

“I would expect to see some upward movement on BTC/GBP markets shortly after the deadline, but since the British pound is a small portion of global crypto volume it may not have a large overall effect on price as some have predicted. It will, however, have a positive impact within the British market, but the degree to which this will affect the global cryptocurrency markets is speculative at this time.”

The post-Brexit Regulation of Cryptocurrencies

On the other hand, the effects of regulations and logistics on cryptocurrency companies operating within the UK are practically indisputable. Its effect on the prices of cryptocurrencies is much more debatable than its impact on regulations.

In reality, the regulatory results of Brexit and the distinct regulatory trail that may probably take place in the UK and the European Union; could have significant repercussions for cryptocurrency firms based outside the UK and wish to continue operating there. In other words, Cryptocurrency firms will have to make serious adjustments and many have already completed their post-Brexit preparations.

Particularly, Coinbase will be making alterations to its e-money service due to Brexit. Additionally, the exchange will switch banks to the Central Bank of Ireland. Back in October, Coinbase did receive an e-money license from the Central Bank of Ireland to adjunct its London operations. With Brexit now a reality, Coinbase is trying to move its business to Ireland. However, it will still be inclined to its U.K. users. 

In conclusion, Brexit may not bring the topsy-turvy legal turmoil as expected. However, with the 11-months transition period after January 31st, cryptocurrency firms will have enough time to clear any legal ambiguities.